Microloan program improvements

(a)

Intermediary eligibility requirements

Section 7(m)(2) of the Small Business Act (15 U.S.C. 636(m)(2)) is amended— (1)in subparagraph (A)—by striking in paragraph (10); and and inserting of the term intermediary under paragraph (11)(A);; and (2)in subparagraph (B)— (A)by striking (B) has at least and inserting the following:

(B)has— (i)at least

; and

(B)by striking the period at the end and inserting the following:

; or (ii)a full-time employee who has not less than 3 years experience making microloans to startup, newly established, or growing small business concerns; and (C)has at least 1 year experience providing, as an integral part of its microloan program, intensive marketing, management, and technical assistance to its borrowers.

(b)

Conforming change in average smaller loan size

Section 7(m)(3)(F)(iii) of the Small Business Act (15 U.S.C. 636(m)(3)(F)(iii)) is amended by striking $7,500 and inserting $10,000. (c)

Limitation on third party technical assistance

Section 7(m)(4)(E)(ii) of the Small Business Act (15 U.S.C. 636(m)(4)(E)(ii)) is amended— (1)by striking

Technical assistance

in the heading and inserting

Third party technical assistance

; and (2)by striking 25 percent and inserting 30 percent. (d)

Loan terms

Section 7(m)(1)(B)(i) of the Small Business Act (15 U.S.C. 636(m)(1)(B)(i)) is amended by striking short-term,. (e)

Report on transferred amounts

Section 7(m)(9)(B) of the Small Business Act (15 U.S.C. 636(m)(9)(B)) is amended— (1)by striking The Administration and inserting the following:

(i)

In general

The Administration

;

(2)by striking the period after financing; and (3)by adding at the end the following new clause:

(ii)

Report

The Administration shall report, in its annual budget request and performance plan to Congress, on the performance by the Administration of the requirements of clause (i).

(f)

Accurate subsidy model

Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) is amended by adding at the end the following new paragraph:

(14)

Improved subsidy model

The Administrator shall develop a subsidy model for the microloan program under this subsection, to be used in the fiscal year 2006 budget, that is more accurate than the subsidy model in effect on the day before the date of enactment of this paragraph.

(g)

Increased flexibility for providing technical assistance to potential borrowers

Section 7(m)(4)(E)(i) of the Small Business Act (15 U.S.C. 636(m)(4)(E)(i)) is amended by striking 25 percent and inserting 30 percent.

PRIME reauthorization and transfer to the Small Business Act

(a)

Program reauthorization

Subtitle C of title I of the Riegle Community Development and Regulatory Improvement Act of 1994 (15 U.S.C. 6901 note) is amended to read as follows:

37.

Program for investment in microentrepreneurs

(a)

Definitions

For purposes of this section, the following definitions shall apply: (1)

Administration

The term Administration means the Small Business Administration. (2)

Administrator

The term Administrator means the Administrator of the Small Business Administration. (3)

Capacity building services

The term capacity building services means services provided to an organization that is, or that is in the process of becoming, a microenterprise development organization or program, for the purpose of enhancing its ability to provide training and services to disadvantaged entrepreneurs. (4)

Collaborative

The term collaborative means 2 or more nonprofit entities that agree to act jointly as a qualified organization under this section. (5)

Disadvantaged entrepreneur

The term disadvantaged entrepreneur means a microentrepreneur that— (A)is a low-income person; (B)is a very low-income person; or (C)lacks adequate access to capital or other resources essential for business success, or is economically disadvantaged, as determined by the Administrator. (6)

Disadvantaged Native American entrepreneur

The term disadvantaged Native American entrepreneur means a disadvantaged entrepreneur who is also a member of an Indian Tribe. (7)

Indian Tribe

The term Indian tribe has the same meaning as in section 4(a) of the Indian Self-Determination and Education Assistance Act. (8)

Intermediary

The term intermediary means a private, nonprofit entity that seeks to serve microenterprise development organizations and programs, as authorized under subsection (d). (9)

Low-income person

The term low-income person means having an income, adjusted for family size, of not more than— (A)for metropolitan areas, 80 percent of the area median income; and (B)for nonmetropolitan areas, the greater of— (i)80 percent of the area median income; or (ii)80 percent of the statewide nonmetropolitan area median income. (10)

Microentrepreneur

The term microentrepreneur means the owner or developer of a microenterprise. (11)

Microenterprise

The term microenterprise means a sole proprietorship, partnership, or corporation that— (A)has fewer than 5 employees; and (B)generally lacks access to conventional loans, equity, or other banking services. (12)

Microenterprise development organization or program

The term microenterprise development organization or program means a nonprofit entity, or a program administered by such an entity, including community development corporations or other nonprofit development organizations and social service organizations, that provides services to disadvantaged entrepreneurs. (13)

Training and technical assistance

The term training and technical assistance means services and support provided to disadvantaged entrepreneurs, such as assistance for the purpose of enhancing business planning, marketing, management, financial management skills, and assistance for the purpose of accessing financial services. (14)

Very low-income person

The term very low-income person means having an income, adjusted for family size, of not more than 150 percent of the poverty line (as defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)), including any revision required by that section). (b)

Establishment of program

The Administrator shall establish a microenterprise technical assistance and capacity building grant program to provide assistance from the Administration in the form of grants to qualified organizations in accordance with this section. (c)

Uses of assistance

A qualified organization shall use grants made under this section— (1)to provide training and technical assistance to disadvantaged entrepreneurs; (2)to provide training and capacity building services to microenterprise development organizations and programs and groups of such organizations to assist such organizations and programs in developing microenterprise training and services; (3)to aid in researching and developing the best practices in the field of microenterprise and technical assistance programs for disadvantaged entrepreneurs; (4)to provide training and technical assistance to disadvantaged Native American entrepreneurs and prospective entrepreneurs; and (5)for such other activities as the Administrator determines are consistent with the purposes of this section. (d)

Qualified organizations

For purposes of eligibility for assistance under this section, a qualified organization shall be— (1)a nonprofit microenterprise development organization or program (or a group or collaborative thereof) that has a demonstrated record of delivering microenterprise services to disadvantaged entrepreneurs; (2)an intermediary; (3)a microenterprise development organization or program that is accountable to a local community, working in conjunction with a State or local government or Indian tribe; or (4)an Indian tribe acting on its own, if the Indian tribe can certify that no private organization or program referred to in this subsection exists within its jurisdiction. (e)

Allocation of assistance; subgrants

(1)

Allocation of assistance

(A)

In general

The Administrator shall allocate assistance from the Administration under this section to ensure that— (i)activities described in subsection (c)(1) are funded using not less than 75 percent of amounts made available for such assistance; and (ii)activities described in subsection (c)(2) are funded using not less than 15 percent of amounts made available for such assistance. (B)

Limit on individual assistance

No single person may receive more than 10 percent of the total funds appropriated under this section in a single fiscal year. (2)

Targeted assistance

The Administrator shall ensure that not less than 50 percent of the grants made under this section are used to benefit very low-income persons, including those residing on Indian reservations. (3)

Subgrants authorized

(A)

In general

A qualified organization receiving assistance under this section may provide grants using that assistance to qualified small and emerging microenterprise organizations and programs, subject to such rules and regulations as the Administrator determines to be appropriate. (B)

Limit on administrative expenses

Not more than 7.5 percent of assistance received by a qualified organization under this section may be used for administrative expenses in connection with the making of subgrants under subparagraph (A). (4)

Diversity

In making grants under this section, the Administrator shall ensure that grant recipients include both large and small microenterprise organizations, serving urban, rural, and Indian tribal communities serving diverse populations. (5)

Prohibition on preferential consideration of certain SBA program participants

In making grants under this section, the Administrator shall ensure that any application made by a qualified organization that is a participant in the program established under section 7(m) of the Small Business Act does not receive preferential consideration over applications from other qualified organizations that are not participants in such program. (f)

Matching requirements

(1)

In general

Financial assistance under this section shall be matched with funds from sources other than the Federal Government on the basis of not less than 50 percent of each dollar provided by the Administration. (2)

Sources of matching funds

Fees, grants, gifts, funds from loan sources, and in-kind resources of a grant recipient from public or private sources may be used to comply with the matching requirement in paragraph (1). (3)

Exception

(A)

In general

In the case of an applicant for assistance under this section with severe constraints on available sources of matching funds, the Administrator may reduce or eliminate the matching requirements of paragraph (1). (B)

Limitation

Not more than 10 percent of the total funds made available from the Administration in any fiscal year to carry out this section may be excepted from the matching requirements of paragraph (1), as authorized by subparagraph (A) of this paragraph. (g)

Applications for assistance

An application for assistance under this section shall be submitted in such form and in accordance with such procedures as the Administrator shall establish. (h)

Recordkeeping and reporting

(1)

In general

Each organization that receives assistance from the Administration in accordance with this section shall— (A)submit to the Administration not less than once in every 18-month period, financial statements audited by an independent certified public accountant; (B)submit an annual report to the Administration on its activities; and (C)keep such records as may be necessary to disclose the manner in which any assistance under this section is used. (2)

Access

The Administration shall have access upon request, for the purposes of determining compliance with this section, to any records of any organization that receives assistance from the Administration in accordance with this section. (3)

Data collection

Each organization that receives assistance from the Administration in accordance with this section shall collect information relating to, as applicable— (A)the number of individuals counseled or trained; (B)the number of hours of counseling provided; (C)the number of startup small business concerns formed; (D)the number of small business concerns expanded; (E)the number of low-income individuals counseled or trained; and (F)the number of very low-income individuals counseled or trained. (i)

Authorization of appropriations

(1)

In general

There are authorized to be appropriated to the Administrator $15,000,000 for each of the fiscal years 2005 through 2007 to carry out the provisions of this section, which shall remain available until expended. (2)

Training for Native American entrepreneurs

In addition to the amount authorized under subsection (i)(1), there are authorized to be appropriated to the Administrator $2,000,000 for each of the fiscal years 2005 through 2007 to carry out the provisions of subsection (c)(4), which shall remain available until expended.

(b)

Transfer provisions

(1)

Small Business Act amendments

The Small Business Act (15 U.S.C. 631 et seq.) is amended by redesignating section 37 as section 38. (2)

Transfer

Section 37 of the Riegle Community Development and Regulatory Improvement Act of 1994 (15 U.S.C. 6901 note), as so designated by subsection (a) of this section, is transferred to, and inserted after, section 36 of the Small Business Act. (c)

References

All references in Federal law to the Program for Investment in Microentrepreneurs Act of 1999 or the PRIME Act shall be deemed to be references to section 37 of the Small Business Act, as added by this section. (d)

Rule of construction

Nothing in this section or the amendments made by this section shall affect any grant or assistance provided under the Program for Investment in Microentrepreneurs Act of 1999, before the date of enactment of this Act, and any such grant or assistance shall be subject to the Program for Investment in Microentrepreneurs Act of 1999, as in effect on the day before the date of enactment of this Act.